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Marijuana is Starting to Intersect with Real Estate

You don’t think of the changing status of marijuana in many states as having a real estate impact but it does. In the states where medical marijuana is decriminalized (and in Washington and Colorado, where it’s decriminalized even for non-medical use), landlords and their rental agents have a disclosure issue on their hands. The landlord has to decide whether or not the rental property accommodates marijuana use, and if so, the rental agent has to be sure to adequately disclose the policy to prospective tenants. That’s just one of the issues stemming from the changing legality of this controlled substance.

The marijuana issue is one of several trending legal issues you’ll be hearing about more in the months ahead. Fracking, which involves extracting gas from shale rock, raises contractual issues: do the rights to the gas leases convey with the property in a sale? The answer is, it depends on what you negotiate. So, agents need to be up on the contractual issues that fracking raise and also has to be able to manage buyers’ and sellers’ expectations about who gets the rights to the gas leases.

NAR Legal Affairs identifies five trending residential real estate legal issues for 2014 and discuss them in this 9-minute video. The five issues are medical marijuana, fracking, pocket listings, IDX copyright violations, and broker liability for actions of a salesperson. Each issue has its own twist. The goal of the video is to make you aware of these twists so you can have a better idea of what to do if you find yourself dealing with one of the issues this year.

Robert Freedman

Robert Freedman is manager of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at rfreedman@realtors.org.

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Comments
  1. Is still federal prohibited so you can say Non Smoker – Non federal illegal substances allowed (like marijuana). If I’m wrong somebody correct me.

  2. Jenny

    non-smoking is not a cover all to say no. marijuana can be ingested many ways…vaporizing is a frequent medical way to ingest, but that is among many other methods of THC consumption. (um, brownies or a little moisturizer cream anyone?) the question goes back to possession and/or use.

    so if the use is via smoking, does that violate the other tenants’ rights to live in a non-smoking environment-as they probably signed up for in their lease? I would think so.

    taking happy pills does not affect a neighboring tenant, while smoking mary j likely would. its not like it is a faint smell nor free of the harmful effects of 2nd hand smoke.

  3. This issue with marijuana has more to do with indoor growers. Indoor growers rent homes to grow pot in. There have been reports of growers rewiring the electrical panels to handle more power; reconfiguration of plumbing to make water accessible in bedrooms; even removing sections of concrete foundations to increase the height of plants. On top of this, it is not uncommon for a grower to have a spill or two. This can be hundreds of gallons of water per incident. The combination of water and heat creates a perfect environment for mold growth. The high wattage required to run the lights can be a fire hazard as well as the often sloppy rewiring. Many times, harmful pesticides and chemicals are used in the home. Loud noises and powerful smells are often released into the neighborhood. When evicted, they will often leave the home trashed. Sellers are required to disclose if the home was used for marijuana growing, even if they find out about it after the fact.

  4. Linda Carroll

    I have seen numerous homes ruined by growers. Time and time again. They don’t care about their deposit. It is a small price to pay for using someone else’s property with out any regard to care. They made thousands of dollars growing and selling marijuana.

  5. Eric Howlett

    Commercial Marijuana growers in Colorado aren’t going after rental homes for grow houses. They are renting large, vacant commercial spaces for their business. Its more cost effective. The commercial vacancy rate in Denver has gone from 9% down to 5%. In Colorado Springs, which opted out of the State’s legal marijuana laws, the vacancy rate remains at 12%. Another windfall coming to Colorado is its tourist business. More people are choosing to vacation in Rocky Mountain High.

  6. Susan

    Reason to make it legal! What about liquor and the effects it has on individuals and rental units, seen many trashed.

    Name me a person who killed someone on the road by being “stoned” and that person can bring my family member back from DEATH due to a DRUNK DRIVER!

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